Bonus Quotation of the Day…

by Don Boudreaux on September 13, 2016

in Inequality, Seen and Unseen, Work

… is from page 189 of David Neumark’s and William L. Wascher’s 2008 comprehensive study, Minimum Wages (original emphasis):

It is perhaps ironic, then, that with respect to one of the questions regarding minimum wages about which there is no theoretical prediction, the evidence appears least ambiguous.  In contrast to the case for disemployment effects [of minimum wages], where some evidence points to no effect or positive effects (although we are critical of this evidence), there is essentially no empirical evidence indicating that minimum wages have beneficial distributional effects.  Instead, the research tends to find either no evidence of distributional effects or evidence that minimum wages increase poverty.

I disagree only with Neumark’s and Wascher’s claim that there “is no theoretical prediction” about the distributional effects of minimum wages.  While nowhere close to being as theoretically strong as is the prediction that raising the minimum wage destroys some job opportunities for low-skilled workers, economic theory helps us to see that minimum wages likely, if not certainly, are beneficial for higher-skilled workers and for more ‘desirable’ or less-risky low-skilled workers.  And because these workers – such as, for example, my minimum-wage-earning 19-year-old physics-and-math-majoring son who has his own car – are more likely than are the workers who are denied jobs by minimum wages not to live in poverty, raising the minimum wage likely bestows its benefits disproportionately on wealthier workers and families, and inflicts its cruel harms disproportionately on the poorest workers and families.

If you really want to fight poverty, fight to end minimum wages.


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